A

PROJECT REPORT
ON
“Project Title”
A Study on stock and share market
(T.Y.B.B.A.)[CBCS Pattern]

SAVITRIBAI PHULE PUNE UNIVERSITY

SUBMITTED TO

K.V. N NAIK SHIKSHAN PRASARAK SANSTHA’S

ARTS, COMMERCE AND SCIENCE COLLEGE
CANADA CORNER, NASHIK

UNDER GUIDANCE OF

GUIDE NAME
Prof. Supriya Pawar
ACADEMIC YEAR
2021-2022

PREPARED BY

Yukta Manoj Harhare

 K. V. N. Naik Shikshan Prasarak Sanstha’s

Art’s, Commerce & Science College

Canada Corner, Nashik-422002 Website: - www.kvnacs.org
Phone: - 0253-2576692
NAAC Reaccredited ‘B++’ Grade
…………………………………………………………………..

CERTIFICATE

This is to certify that, Mr./Ms. Yukta Manoj Harhare

of TYBBA CREDIT PATTERN 2019 [CBCS Pattern] Class has Prepared &

Submitted PROJECT on FINANCE satisfactory for A study on stock and share

market During the academic year 2021-2022

(Semester- V) and same has examined and signed by the in- charge.

In-charge Int. Examiner Ext. Examiner Principal

2
3
Introduction
With the ever increasing and expanding economy, Indian economy is considered as a
growth engine of the world’s economy. And stock market of such robust economy is
the face of the growing market and companies in it. India has one of the oldest and the
fastest stock market platform i:e Bombay Stock Exchange (BSE). Stock market
basically is an electronic platform where the share of the companies are listed and
traded. Because of this advanced platform it is possible for companies to raise capital
from public efficiently and effectively. With the economic reforms in the country, stock
exchanges have grown exponentially in terms of foreign institutional investment and
transaction turnover. This increase is mainly due liberalized and supportive along with
regulative role of government. The share prices of the listed companies fluctuate on the
basis of various factors which affect and build the sentiments of markets and investor.
In India, we have a very low level of economic literacy and if we quantify it then in a
population of more than 125 Crore, less than 2% of population actually invests in stock
market. Such low participation is because of the above mentioned low level of economic
literacy plus huge fluctuations in the market due to several factors. India is pioneer in
Information Technology industry and IT companies of India are one of the greatest
contributors in total export as well as fame for the country. Being a pioneer industry,
shares of IT companies are always remain in the limelight of stock market. Further
return on this is again fluctuative due to industry and market factors. Since so many
fluctuations exist in the stock market, it creates an urge to study about those factors
which are responsible for the ups and downs in the market.

4
STOCK EXCHANGES IN INDIA

Stock Exchange (also known as stock market or share market) is one of the main integral
part of capital market in India. It plays a vital role in growing industries and commerce
of a country which eventually affect the economy. It is well organized market for
purchase and sale of corporate and other securities which facilitates companies to raise
capital by pooling funds from different investors as well as act as an investment
intermediary for investors. Moreover, it ensures that securities should be traded
according to some pre-defined rules and regulations.

London Stock Exchange is the oldest stock exchange in the world whereas Bombay
Stock Exchange is the oldest one in India. In India, there are 7 Stock Exchanges out of
which NSE and BSE are the two main indices. Most of the trading in Indian Stock
Market takes place on these two stock exchanges. Both the exchanges follow the same
trading hours, trading mechanism, settlement process etc. At the last count, BSE
comprises of 5800 listed firms whereas on the other hand its rival NSE consists of 1659
listed firms. Interestingly, out of all the firms listed on BSE, only around 500 firms
constitutes more than 90 % of its market capitalization.

5
Bombay Stock Exchange (BSE)
Bombay Stock Exchange is the leading and fastest stock exchange in India as well as
in South Asia established in 1875. Bombay stock exchange is the world's 11th largest
stock market by market capitalization at $1.7 trillion as of 31 January 2015 (Monthly
Reports, World Federation of Exchanges). More than 5,000 companies are listed on
BSE. The main index of Bombay stock exchange is Sensex which comprises of 30
stocks.

National Stock Exchange

National Stock Exchange was incorporated in 1992 as a tax paying company and was
recognized as a stock exchange in 1993 under the Securities Contracts (Regulation) Act
1956. NSE is the 12th largest stock exchange in the world with a market capitalization
of more than US$ 1.65 trillion as on 31 January 2015 (Monthly Reports, World
Federation of Exchanges). Moreover, it was the first exchange to provide fully
automated screen based electronic trading system. Nifty is the indices to measure
overall performance of the National Stock Exchange which comprises of 50 stock index.

Functions of Stock Exchange

The Stock Exchange serves two critical functions:

 It provides a critical link between companies that need funds to set up new
business or to expand their current operations and interested investors.
 Stock Exchange also acts as a guide for the investors that have excess
funds to invest in such companies.

The main aim of this study is to determine the impact of various economic variables
on the performance of stock market of selected listed IT companies on NSE.

6
SECTOR INDICATORS

There are number of sectors or industries which are listed on National Stock Exchange
and Bombay Stock Exchange. In addition to this, an individual sector comprises of
number of companies. There are around 73 sectors listed on NSE and BSE separately.
Some of the important sectors present on both the exchanges are as follows:-

 BANKING SECTOR

 AUTOMOBILE SECTOR

 INFORMATION TECHNOLOGY SECTOR

 METAL SECTOR

 REAL ESTATE SECTOR

 FMCG SECTOR

 MEDIA & ENTERTAINMENT SECTOR

 PHARMACEUTICALS SECTOR

 POWER SECTOR

 sPSU BANK SECTOR

7
Selection of the topic
Researchers’ interest should be either in the core discipline or in closely related disciplines.
Interdisciplinary research is now encouraged within the specifications and the standards set by
the institute. Try to identify three potential topics and write a clear statement of the problem
and describe research methodology in each case. Also think about the alternatives for
discussion.
When the scope of a topic is too broad or too narrow, it will be difficult to conduct research. If
the topic is too broad, the researcher will end up writing only in general and is unlikely to go
deeper into the problem due to the limitations of time and resources. If the topic is too narrow,
it becomes difficult to find adequate literature which is necessary to describe the background
of the study and to identify a research gap. It is necessary to narrow down the broad topic to a
specific topic that is suitable for research.
The choice of a research topic is governed primarily by the interest and passion of the
researcher. The research interest is normally limited to the core or related disciplines to be
acceptable to the supervisor and the university. Narrow and focused topics that might advance
scientific knowledge or solve practical problems or might benefit society are further examined
from the feasibility and ethical aspects. The ‘FRIENDS’ framework for topic selection, which
incorporates different aspects, might be useful for research scholars

8
 LITTERATURE REVIEW
 Guru, U. Idris I (2009) have done a number of studies to evaluate the
relationship between stock market returns and various macroeconomic
variables. The present research has been undertaken to examine the
macroeconomic variable that are responsible for fluctuations in the stock prices
of Nigeria Stock Market. Findings of the study reveal that stock prices moves in
the same direction with Gross Domestic Product, Money Supply, Total Deficits,
and Interest Rate while Inflation Rate and Index of Industrial Production moves
in opposite direction.
 Nasif AL, F.Shubiri (2010) empirically examines the effect of micro and
macro-economic factors on the movement of the stock prices of 14 commercial
banks of Amman Stock Exchange for the period 2005 -2008. and the results
portrays that Net Asset Value Per Share, Dividend Percentage and Gross
Domestic Product have highly positive significant relationship with Market
Price of Stock whereas there is a negative significant relationship between
Inflation and Lending Interest Rate with Market Price of Stock.
 Girard, EC (2010) investigates the connection between investability and return
dynamics of stocks traded in emerging markets. The results depict that
investable premium also act as an important fundamental factor which influence
the stock market. Girard, EC (2010)
 Shen, CH. & Lin, KL (2010) investigates whether corporate governance affects
the impact of the relationship between fundamental signals and stock returns
using Taiwanese data in which they observed that in a strong governance regime,
the responses of stock returns to the fundamental signals are found to be greater
than those in weak governance regimes.

 Butt, B.Z. Rehman, K.Khan, M. Safwan,N. (2010) attempt to reveal the
connection between specific economic variables and return variations of stocks
traded in Karachi Stock Exchange. However, they finds out that market index,
consumer price index, risk free rate of return, exchange rate, industrial
production index, money and individual industrial production are the economic
variables which influence the stock prices of banking and textile industry.
Moreover, it has also been identified that economic exposure is higher at
industry level as compare to firm level stock returns.
 Olweny, T. Omondi, K. (2011) aims at describing the influence of three
macroeconomic variables on the stock return volatility in the Nairobi Stock
Exchange, Kenya i.e. NSE 20 share index. As a result, it can be concluded that
selected macroeconomic variables i.e Foreign Exchange Rate, Interest Rate and
Inflation Rate have significant impact on the prices of stocks listed in Nairobi
Stock Exchange.

9
 Moreover, Le, TH. Chang, Y. (2011) evaluated the impact of oil prices on the
stock prices of Japan, Malaysia, Singapore and South Korea. The main finding
of the study is that oil and stock prices have highest correlation in South Korea
followed by Singapore, Malaysia and Japan.
 Bayezid Ali (2011) tried to analyze the influence of micro and macro-economic
variables on the all share price index of Dhaka stock Exchange and reached to a
conclusion that inflation and foreign remittance have negative influence
whereas industrial production index, market P/E & MKTPE have positive
influence on stock returns.
 Naik & Padhi (2012) studied the relationship between Indian stock Market
Index (BSE Sensex) and five macro-economic variables and results reveal that
there exists co integration between BSE Index & macro-economic variables
which proves that there is a long term relationship between them.
 Dr. Aurangzeb (2012) made an attempt to make out the factors influencing the
performance of stock market in South Asia and the study indicate that Exchange
Rate and FDI have positive impact on Stock Market and Interest Rate has
negative but significant while Inflation has negative as well as insignificant
impact on the performance of Stock Market of South Asian countries.
 This paper analyze the influence of Money Supply, consumer Price Index, Gold
Prices, crude Oil Prices, Foreign Exchange Reserves, FDI, FII, Balance Of
Trade, Foreign Exchange Rate, Call Money Rate, Repo Rate, Industrial Growth Rate
on the market of National Stock Exchange. In connection to this, the findings of the
study suggests that industrial performance significantly influence the stock market as
well as market also rely on macroeconomic environment to maintain macro stability.
 Joshi (2013) identified the major factors held responsible to create movement in
stock market. He found from the study that the factors like growth of Gross
Domestic Product, flow of FIIs, Inflation, Political Stability, Liquidity and
Different interest rate are the major factors accountable for up and down
movement in Indian stock market.
 The main motive of Sapna & Dani (2014) behind the study of this paper is to
critically examine the factors which affect the trading volume of BSE index.
Findings of the study reflect that there exist a significant relationship between
price and trading volume and it is affected by stock prices.
 Moreover Shah (2014) examined the trend and pattern of Foreign Institutional
Investments flow in India and also describes the relationship between FII and
Nifty. From the research evidence, it has been observed that there is a moderate
positive correlation between Foreign Institutional Investment and CNX Nifty
stock market.
 A study of interquartile behavior of stock returns of selected 19 companies listed
at BSE has been conducted by Kothari & Kothari (2015) which reveals that
stock betas are not symmetric they differ significantly over the bullish & bearish
market state.
 Rajesh & Bhaskar (2015) try to explore the variation in share prices of selected
10
 Indian manufacturing firms listed at Bombay Stock Exchange and it is
concluded that Market Return, Growth in market & Industrial Production
positively influences the stock returns at firm and industry level whereas rising
inflation adversely affect the stock returns and GDP is insignificant but
positively related to stock returns of the firm.
 Ismail, Mustafa, Nijam. (2015) applied the correlation and multiple regression
tool to investigate the relationship between macro-economic variables and
performance of stock market of Sri Lanka with the study period from 1980 to
2012. Findings of the study confirm that macro-economic factors continue to
affect stock prices of Colombo Stock Exchange.
 Ray & Vani unravel the relationship between macro-economic variables and
performance of capital market in Indian context (BSE).After the analysis they
found out that Interest Rate, Output, Money Supply, Inflation Rate and
Exchange Rate has considerable influence on the stock market while other
variables have very negligible impact

11
LIMITATION OF STUDY

Like any other institution, the stock exchanges too have their limitations. One of the common
evils associated with stock exchange operations is the excessive speculation. Speculation implies
buying or selling securities to take advantage of price differential at different times. The
speculators generally do not take or give delivery and pay or receive full payment. They settle
their transactions just by paying the difference in prices.

Normally, speculation is considered a healthy practice and is necessary for successful operation
of stock exchange activity. But, when it becomes excessive, it leads to wide fluctuations in prices
and various malpractices by the vested interests. In the process, genuine investors suffer and are
driven out of the market.

Another shortcoming of stock exchange operations is that security prices may fluctuate due to
unpredictable political, social and economic factors as well as on account of rumours spread by
interested parties. This makes it difficult to assess the movement of prices in future and build
appropriate strategies for investment in securities. However, these days good amount of vigilance
is exercised by stock exchange authorities and SEBI to control activities at the stock exchange
and ensure their healthy functioning.

Year No. of Research

Paper
2008- 01
2009
2009- 01
2010
2010- 04
2011
2011- 04
2012
2012- 04
2013
2013- 05
2014
2014- 03
2015
2015- 08
2016

12
 Geographical Area Covered in the Review:

National International

14 16

The Review of literature plays a vital role in carrying out further research work.
Various sources have been used here for research work reviewed such as journals,
internet sites, etc. The review of literature has been divided on the basis of various
fundamental factors affecting the stock market.

13
COMPANY PROFILE

India’s service sector contributes a greatest part in the GDP of Indian economy accounting for 57
% in 2012 as compare to 15% in 1950. The service sector also generates employment
to 27% of the work force. Information technology is among the fastest growing sector.
A short overview of Indian Information Technology industry is presented here for better
understanding of the uniqueness that this industry possesses. Information technology
industry has played a vital role in the Indian economy during the last few years. A
number of large, profitable Indian companies today belong to the IT sector and a great
deal of investment interest is now focused on the IT sector. India’s IT services industry
was born in Mumbai 1967 with the establishment of TATA group in partnership with
Burroughs. Majorly it consists of two main components: IT services and BPO (Business
Process Outsourcing). According to NASSCOM, in 2015 Information Technology
sector has contributed aggregated revenue of US$ 147 billion as well as the contribution
of IT industry in the country’s GDP has been raised from 1.2% in 1998 to 7.5% in 2012.
Moreover, IT sector is currently generating around 2.5 million direct employments in
India which will further enhance and also it provides a large reservoir of highly skilled,
low cost and educated workers to meet the increased demand of foreign consumers.
Besides, to enhance this sector the Government has also come up with Digital India
initiative, which highlights three main components: creation of digital infrastructure,
delivering services digitally and to increase the digital literacy. At the last count, IT
sector has been selected as it majorly contributes in the free float market capitalization
of stocks listed on BSE and NSE.

14
Vision and mission of organization

Determining stock returns is a complex and conflicting task. There are number of forces
which influence the share returns of stock market. . Although, there is no pre-planned
system which can trace the exact movement in the stock returns of the stock market.
However, fundamental factors, external factors and market behavior can cause increase
and decrease in the demand and supply of individual stock.

Major factors working on this case consist of indicators of firm’s performance,

investor’s perception, market efficiency, and some macro-economic variables such as
Inflation, GDP, FDI, Interest Rate, Oil Prices etc. Majorly, there are two thoughts
related to this concept, first is the technical analysis and second one is fundamental
analysis. Former is a technique which is actually a statistical tool used to predict share
price by the use of past share prices data whereas
the later one is the method of stock valuation by using financial information with the
help of a specific model.

Fundamental Analysis is further classified in two categories one is company specific variables and
other is macro-economic variables.
Company specific variables include Earning Per Share, Dividend Per Share,
Price/Earnings Ratio, Book Value Per Share, Return On Equity, Net Asset Value etc
and macro-economic variables include Gross domestic product, Inflation, Foreign
Direct Investment, Interest Rate, Oil Prices.

15
History of organization.

 Sharma (2011) studied the impact of certain selected explanatory variables on

the equity prices of Indian companies which truly helped to identify that
Dividend per Share & Earning Per Share are considered to be the strongest
determinants of share price. Further, higher Book Value Per share depicts a
sound financial position of a company which leads to positive impact on share
price.
 As mentioned previously, Malik, Qureshi & Azeem (2012) also studied the
impact of Book Value and Earning Per Share on the share price of selected fifty
two companies taken from Karachi Stock Exchange by using Ohlson model.
The study reveals that there is a high determination power according to Ohlson
model of valuation while there is a minor improvement after adopting the cross
product term.
 (Allahawiah, S. & Amro, SA.(2012) determine, analyze and evaluate the
impact of internal factors responsible for the fluctuations in the share prices of
listed stocks in Amman Stock Exchange. The result of the study shows that many
factors have relationships, both positive and negative with share market out of
which dividend policy has major impact on the stock prices while least one was
the nature of firm’s business.
 Das & Pattanayak (2013) talks about the effect of corporate fundamental
factors on the stock prices including the Sensex and Nifty. Conclusion reveals
that share prices of companies registered at NSE and BSE are greatly influenced
by the corporate fundamental factors.
 Tandon, K. & Malhotra, N. (2013) investigated the firm’s specific variables
which affect the share prices in the context of National Stock Exchange (NSE)
100 companies. They found a significant positive association of firms book
value, EPS & P/E Ratio with firm’s stock price whereas Dividend Yield is
having significant inverse association with market price of firm’s stock.

16
 Conducting research in Dhaka Stock Exchange Haque & Faruquee. (2013)
concluded that stock prices at Dhaka Stock Exchange is more influenced by
other factors as compare to company specific factors.
 Sindhu, Bukhari & Hussain (2014) tried to identify the factors responsible for
the ups and downs in the share price of some listed companies in Karachi Stock
Exchange and it has been observed that 65 percent of the variation in stock price
is due to the internal factors which includes cash flows, leverage, profitability,
growth, market capitalization, and dividend.
 Geetha & Swaaminathan (2015) did a study of four automobile and IT
industry listed at NSE and BSE and concluded that there is a significant effect
of Earning per Share, Price/Earning Ratio and Book Value per Share on the
movement of stock prices whereas dividend per share doesn’t have any effect
on the market price.
 Sharif, Purohit & Pillai (2015) explored Bahrain Stock Exchange to study the
impact of company specific variables on the stock prices of companies listed in
Bahrain Stock Exchange. Moreover, the results indicates that ROE, Book Value
per share, Dividend per share, Dividend Yield, Price Earning ratio, Firm’s Size
are significant determinants of share price in the Bahrain stock Market.

17
Product of organization

NSE offers a comprehensive and innovative product and service offerings

delivered through a vertically-integrated business model supported by a
robust risk management system framework. NSE is driven its committment
of a more inclusive and transparent market, in its search for newer products
and processes. It recognises that technology forms the core of financial
markets in driving greater transparency and is ever evolving. Though we
launched the Capital Market segment on November 3, 1994 we continue to
expand the range of products and services that we offer.

The products on the Exchange are organized into 3 asset classes for
trading: Capital market for the listing and trading of equities, fixed income
securities and the derivatives market.

Equity and equity-linked products available for trading in the cash market
include stocks, IDRs, ETFs (including those benchmarked the NIFTY
indices) and units of closed-ended mutual fund schemes, as well as a
segment devoted to the growth of the SME's listed on EMERGE.

Under the Derivatives segment, NSE offers derivative contracts on Equity,

Indices, Currency, Interest Rates and Commodities.

The fixed income securities and Debt products include Negotiated Trade
Reporting in Government securities, Corporate Bonds, Sovereign Gold
Bonds and other debt securities traded on multiple platforms

Tools & Techniques:

The below mentioned techniques and tools will be used in order to

derive the results of the proposed study. The techniques used will be:

 For Descriptive Statistics: Arithmetic Mean & Standard

Deviation and Graphical Presentation.

 To check the stationarity of data : Unit Root Testing.(ADF –

Augmented Dickey Fuller Test) ( PP – Phillips Perron Test)

 To find out the relationship: Multiple Correlation and Multiple Regression.

 Software Metlab and E-Views will be used to analyze the data.

18
 Organization chart

Table No. 1: Reviewed Articles

S. Author Title Study Country/ Source of Findings
No Name Objective/Stu Geographica Data
dy l Area Collection/
Description covered
Data
Analysis
Method

1. Ahmed, S Aggregate This paper India Website of Movement of

Economic studies the NSE and BSE stock prices is
(2008)
Variables and casual not only
Stock relationship affected by
Markets in between stock Johansen’s key macro
India. prices and the approach of economic
key co integration variables but
macroeconomi & Toda & also influenced
c variables Yamanoto by other macro
representing Granger dimensions in
real and Casuality the economy.
financial sector Test, BVR
of the econoy. Modelling

2. Guru, U. Environment Examination of Nigeria Issues of Stock prices

Idris I. al factors macro – Central Bank moves in the
Influencing economic of Nigeria same direction
(2009)
Fluctuation variables that with GDP,
Multiple
of Share are responsible money supply,
Regression
prices on for fluctuations total deficit &
Nigeria Stock in Nigeria interest rate
Exchange Stock Market. while inflation
Market. rate & index of
industrial
moves in
opposite
direction.

19
3. Nasif AL, Analysis the To find out the Jordan Amman Stock Highly positive
F.Shubiri Determinants impact of Exchange and relation between
of Market various micro banks’ annual Market Price of
(2010)
Stock Price and macro reports/ Stock &
Movements: economic NAVPS ,
Simple and
An Empirical factors Dividend
multiple
Study of affecting stock percentage, &
regression
Jordanian market of Gross Domestic
analysis
Commercial Jordan. Product.
Banks
Negative
relationship on
inflation and
lending
interest rate .
4. Girard, Empirical To investigate US (SP/IFC) The average
EC. Evidence of the connection EMDB return and
the Existence between Reports) volatilityof
(2010)
of Investable investability more
Factor
Premiums in and return investable
Emerging dynamics of Analysis stocks is
Market stocks traded greater than
Investable in emerging the average
Stocks market. return of less
investable
stocks.

20
5. Shen, CH. The Impact This study Taiwan Endogenous It has been
& Lin, of Corporate investigates Switching observed that
KL Governance whether Model (ESM) in a strong
(2010) on the corporate of Hu and governance
governance Schiantarelli regime, the
Relationship
affects the (1998), responses of
Between
impact of the stock returns to
Fundamental
relationship the
Information
between fundamental
Analysis and fundamental signals are
Stock signals and found to be
Returns stock returns greater than
using those in weak
Taiwanese governance
data. regimes.

6. Butt, B.Z. Do economic To examine Pakistan Website of It is founded

Rehman, factors the stock (KSE) KSE & that economic
K.Khan, influence return variation Business exposure is
M. stock to specific records, State higher at
Safwan,N. returns? A economic Bank of industry level
firm and variables by Pakistan, than firm level
(2010) industry level multi- factor Economic stock returns.
analysis. model. survey of
Pakistan.

GARACH
Model

21
7. Ali, MB. Impact of To examine Bangladesh Monthly Inflation and
Micro and the impact of Review Foreign
(2011) Macroecono three macro Publication Remittance
mic and two issued by have negative
Variables on company DSE & influence and
Emerging specific monthly IPI, Market P/E
Stock Market variables on economic & MKTPE
Return :A the all share trend issued have positive
Case Study price index of by influence on
on Dhaka DSE. Bangladesh stock returns.
Stock bank
Exchange
Multivariate
(DSE)
Regression
Model

8. Sharma, Determinants To examine India CMIE All these

Dr S. Of Equity the empirical Monthly variables
Share Prices relationship reviews, SEBI affect market
(2011)
In India between equity annual price of share
share reports, BSE in positive
price & annual direction &
explanatory reports, helps the
variables. Financil investors to
Journal forecast future
stock prices.
Correlation &
Linear
Multiple
Regression

22
9. Olweny, The effect of To investigate Kenya NSE, Central Stock returns
T. macro- the effect of Bank of are affected by
Omondi, economic macro Kenya & Foreign
K. factors on economic Kenya Exchange
stock return factors on the National Rate, Interest
(2011)
volatility in stock return bureau of Rate, Inflation
the Nairobi volatility in the Statistics. Rate.
Stock Nairobi
Econometric
Exchange, Securities
Model &
Kenya Exchange,
GARCH
Kenya.
Model

10. Le, TH. The impact To evaluate the Japan, Website Oil & stock
Chang, Y. of oil price impact of oil Malaysia, prices have the
fluctuations prices on the Singapore & Regression highest
(2011)
on stock stock prices of South Korea correlation in
markets in Japan, South Korea
developed Malaysia, followed by
and emerging Singapore & Singapore,
economies. South Korea Malaysia and
Japan.

11. Naik, P. The Impact Investigates India Website of Reveals that

Padhi, P. of the relationship NSE and BSE Index
Macroecono between Indian BSE. and
(2012)
mic Stock Market Macroeconom
Johansen’s co
Fundamental Index (BSE ic variables
integration &
s on Stock Sensex) & five are co
Vector Error
Prices macroeconomi integrated and
Correction
Revisited : c variables. hence there
Model
Evidence exist a long
from Indian term
Data. relationship
between them.

23
12 Dr. Factors To identify the South Asian Official It indicates that
Aurangze Affecting macro Countries database of FDI and
b Performance economic including World Bank, Exchange Rate
of Stock factors Pakistan, stock market have positive
(2012)
Market: affecting the India, Sri and official impact and
Evidence performance of Lanka website of Interest Rate &
from South stock market in yahoo finance Inflation have
Asian South Asia. . negative impact
Countries on performance
of stock market
in South Asian
countries

13. Malik, Determinatio Is share price Pakistan Balance Sheet The study
MF. n of Share significantly Analysis of reveals that
Qureshi, Price: determinable PLC at KSE, there is a high
MU. & Evidence by the Book Annual determination
Azeem, from Karachi Value Per reports of power by using
M. (2012) Stock Share and companies, Ohlson while
Exchange Earning Per Website of there is a minor
Share using ICAP & improvement
Ohlson model? SECP. / after adopting
the cross
Regression
product term.
Analysis,
Fixed Effects
Model

24
14. Allahawia Factors To determine , Jordan Website of Among are
h,S. affecting analyze & Amman Stock mentioned
Amro, SA Stock Market evaluate the Exchange factors dividend
prices in impact of policy has
(2012) Anova, Factor
Amman internal factors major impact on
Analysis,
Stock on prices of the stock prices
Correlation
Exchange: A listed stocks in while least one
and
Survey Study Amman Stock was the nature
Regression
Exchange. of firm
business.

15. Kumar, R. The effective To analyze the India Website of All the
Macroecono influence of NSE variables are
(2013)
mic factors macro divided as
Factor
on Indian economic Macro
Analysis
Stock Market variables on Environmental,
Performance: the market of Industrial
A factor National Stock Performance &
Analysis Exchange. Policy Rates. It
Approach. has been
identified that
industrial
performance
significantly
influence the
stock market.
Market also
rely on
macroeconomi
c environment
to maintain
macro
stability.

25
16. Das, N. & The Effect of To study the India Secondary Corporate
Pattanaya Fundamental effect of data collected fundamental
k, J K . Factors on corporate from the factors have a
Indian Stock fundamental website of great impact
(2013).
Market: A factors on NSE and BSE on the share
Case Study Indian stock / prices of
of Sensex market companies
Correlation &
and Nifty including NSE registered at
Regression
and BSE NSE and BSE.

17. Joshi, M. Factors To identify India Multiple The major

affecting major factors Regression factors that
(2013) Indian Stock affecting Analysis affect the
Market Indian stock Various stock Indian Stock
market. brokers & Market are
their Flow of
employees Foreign
listed at NSE Institutional
and BSE , and Investors,
having their Political
branch at Stability,
Surat City. Growth of
Factor Gross
Analysis Domestic
Product,
Inflation,
Liquidity and
different
interest rate,
Global level
factors

26
18. Tandon, Determinants To examine India Correlation & Firms Book
K. & of Stock the relationship Linear Value, EPS,
Malhotra, Prices: between stock Multiple P/E Ratio are
N. Empirical prices and Regression having a
Evidence company positive
(2013)
from NSE specific factors association
100 such as book with firm.
Companies value per
share, dividend
per share,
earning per
share, price
earnings ratio,
dividend yield
etc

19. Haque, S. Impact of To examine Bangladesh Annual It has been

Faruquee, Fundamental the influence Reports of observed that
M. Factors on of various Companies there is no
Stock Price : fundamental significant co-
(2013) Multiple
A Case factors in relation
Regression
Based determining between stock
Analysis
Approach on the market price and
Pharmaceutic price of Dhaka companies
al Companies Stock fundamental
Listed With Exchange. variables.
Dhaka Stock
Exchange

27
20. Sindhu, Macroecono To analyze the Pakistan Library of Various
MI. mic Factors factors KSE and selected factors
Bukhari, do responsible in Annual influence the
SMH. & influencing identifying the Reports of stock prices of
Hussain, Stock Price: share price of companies KSE.
A. A Case Study some listed
Regression
on Karachi companies in
.(2014) Analysis
Stock Karachi Stock
Exchange Exchange.

21. Sapna. Stock Market To understand India Convenience There is a

Dani, Dr and Factors the relationship sampling was significant
(BSE Index)
V. Affecting between price used to select relationship
Trading and trading 30 between price
(2014)
Volume volumeof BSE respondents and trading
Index. (relationship volume of BSE
managers) and Index.
&
a
Majorly
To determine questionnaire
trading volume
the factors was used to
is affected by
affecting take their
stock prices,
trading responses.
liquidity, news
volume. Factor and media
Analysis, reports.
Cross
Tabulation,
Chi square

28
22. Shah, M. Flows of FIIs Examines the India Bulletins of CNX nifty
and Indian trend & pattern RBI, SEBI has
(2014) Stock Market of FII flow in handbook, increased
India & also NSE website, over a period
examines the Publication of 13
relationship from ministry years from 2001
between FII & of commerce. to 2013 .
Nifty.
Correlation & There is a
Regression moderate
positive
correlation
between FII &
CNX nifty
stock market.
23. Suriani,S. Impact of Evaluates the Pakistan KSE 100 There is no
Kumar, Exchange relationship Index, State relationship
M. Rate on between stock Bank of exist between
Farhan, Stock market & Pakistan and exchange rate
Jamil. Market. exchange rate Forex. and stock price
Muneet, of Pakistan and both the
Regression
Saqib. (KSE – 100) variables are
Analysis Test
independent of
(2015)
each other.

24. Kothari, R Asymmetric Study the India Prowess The stock

.& Stock Beta effect of the database of betas are not
Kothari, R Behavior : A change in CMIE / symmetric
. Quantile market they differ
Quantile
Regression portfolio significantly
(2015) Regression
Analysis returns on over the
selected 19 bullish &
companies bearish market
listed at BSE state.
in lower,
medium &
higher return
range during
the up and

29
 down state.

25. Geetha, E. A Study on To analyze and India Website of It has been

& the factors compare the NSE and observed that
Swaamina influencing affect of BSE/ fundamental
than, Ti. share prices: fundamental factors have
Ratio
M. A factors great impact
Analysis
Comparative influencing the on the share
(2015)
Study of movement of prices
Automobile stock prices of movement of
and selected selected
Information companies of companies.
Technology automobile and
Industries IT industry.
Stocks in
India

26. Rajesh, Impact of To study the India World Growth in

M. & Fundamental factors like Development market return ,
Bhaskar, Factors on Change in Indicators / Industrial
K. Share Price MPS, Production &
Pearson’s
Movements - PPP,GDP, GDP
(2015) Correlationan
A Study on Inflation positively
alysis and
Select Listed (INFL), influences the
Regression
Companies Money Supply stock returns
analysis
of Indian (M2) and of most of the
manufacturin Industrial firms and
g industries Production industries
in Bombay (INP) that whereas
Stock affects the Inflation is
select listed not.

30
 Exchange companies in
BSE of Indian
manufacturing
industries.

27. Ismail, The Impact Investigates Sri Lanka Central Bank The study
SMM. of Macro- the relationship Annual confirms that
Musthafa Economic between macro Reports 1977- macro
, AMM. Variables on economic 2012, economic
Nijam, Stock Market variables and Economic & factors
HM. Performance; performance of social continue to
Evidence stock market Statistics in affect stock
(2015) Sri Lanka
From Sri of Sri Lanka prices of
Lanka. 1990- 2012 Colombo
Stock
Correlation
Exchange
and Multiple
regression

28. Ray, P. What Moves To unravel the India Handbook on It reveals that
Vani, V. Indian Stock relationship Statistics IR, output,
Market : A between the (RBI) & M2, inflation
study on the economic Economic rate & ER has
linkage with variables and Survey (Govt. considerable
Real the capital of India). influence on
Economy in market in the stock
VAR &
the Post- Indian context market while
Artificial
Reform Era. (BSE). other variables
Neaural
have
Network
negligible
(ANN).
impact.

31
29 Sharif, T. Analysis of To determine Bahrain Website of the Results indicates
Purohit, factors the effect of Bahrian Stock that ROE, BVPS,
H. Pillai, Affecting company Exchange. DPS, Dividend
R. Share specific Yield, P/E Ratio,
Regression
Prices: The variables on firms size are
and
case of the shares of significant
Correlatio
Bahrian companies determinants of
n
Stock listed in share prices in the
Exchange. Bahrian Stock Bahrain Market.
Exchange.

30. Sharma, Impact of To explore and India Federal Reveals that

G. Macroecono study the Reserve exchange rate
mic effect of Statistical, and gold price
Mahendru
Variables on macroeconomi RBI, have significant
, M.
Stock Prices c variables on NASDAQ, relationship with
in India stock prices BSE website stock prices as
(BSE Index) & &Money compare to
also the Control. inflation and
correlation FER.
Mutiple
between them.
Regressio
n Model

32
 Research methodology
Concept and definition of research

A number of fundamental factors affect the stock market which has been proved by
various researchers but the lacking areas that was found in the above given research
papers are

 Most of the researchers have focused on either macro-economic variables or

company specific variables. Very few have worked on both the variables.
 Majority of the research work has been conducted on the top players of stock
exchange. Very few researchers have worked on specific industry.
 Not more than 6-7 variables have been studied in the research papers reviewed.

 As per the reviewed papers the study on factors affecting stock market has
been mainly conducted at International level.


Primary Research

Much like how different academic fields have different Discourse Communities, how
research is defined varies widely from field to field, and, as you progress through your
college career, your coursework will teach you much more about what it means to be a
researcher within your field. For example, engineers, who focus on applying scientific
knowledge to develop designs, processes, and objects, conduct research using
simulations, mathematical models, and a variety of tests to see how well their designs
work. Sociologists conduct research using surveys, interviews, observations, and
statistical analyses to better understand people, societies, and cultures. Graphic designers
conduct research through locating images for reference for their artwork and engaging in
background research on clients and companies to best serve their needs. Historians
conduct research by examining archival materials—newspapers, journals, letters, and
other surviving texts—and through conducting oral history interviews. Research is not
limited to what has already been written or found at the library, also known as secondary
research. Primary research is research that is collected firsthand rather than found in a
book, database, or journal.

33
Research Methodology for project

Economic variables like Interest rate and inflation rate, GDP, GDP PER CAPITA are taken in to
consideration in this study. All these macroeconomic variables impact on Indian stock market
and American stock market are measured by applying correlation and regression analysis. BSE
SENSEX and DOW JHONS are taken as proxy of stock market performance in both the
countries. Yearly market capitalization is taken in to account for measuring the market
performance. Inflation, Interest rate, GDP, GDP PER CAPITA are also interpreted on the basis
of yearly data provided by World Bank and Yahoo Finance. Apart from that various journals,
articles, blogs, and economic websites also followed for deriving concurrent evidences and
previous works on the present study. The current study is using simple linear techniques. The
use of this model is due to find out the relation between dependent variable (SENSEX) and
independent variable (macro-factors)

34
Theoretical Framework

Independent Variable Dependent Variable

Macroeconomic Stock Returns
Variables &
Company Specific
Variables

Independent Variable: Macroeconomic Variables &Company Specific Variables.

Dependent Variable: Stock Returns

Variable Selection

Data used in the study has been categorized into three parts.

1. Stock Returns – It includes the data related to the stock returns of selected IT
companies listed on NSE.
2. Company Specific Variables – It comprises of the data related to company
specific variables such as Earning per Share, Book Value, Dividend per Share,
Return on Equity, Price Earnings Ratio.
3. Macroeconomic Variables – It consists of the information related to
macroeconomic variables such as Exchange Rate, Foreign Exchange Reserve,
Industrial Growth Rate, Inflation, Repo Rate, Gold Prices, Foreign Direct
Investment, Crude Oil Prices.

These factors have been selected on the basis of review of literature and availability of
data for past years starting from 1 April 2006 to 31 March 2016.

35
Research Objectives

The research will be undertaken with the aim of the following objectives:

 To study the impact of selected company specific variables on the stock

returns of selected IT companies.
 To study the impact of selected macro-economic variables on the stock returns
of selected IT companies

Hypotheses of the Study

Hypothesis 1:

H01: There is no significant impact of Macroeconomic variables on

stock returns. Ha1: There is a significant impact of Macroeconomic

variables on stock returns. Hypothesis 2:

H02: There is no significant impact of Company specific variables on stock

returns. Ha2: There is a significant impact of Company specific variables on

stock return.

36
Research Methodology
In conducting research, the area of investigation and the research questions determine the
method that the researcher follows. The research method consists of how the researcher
collects, analyzes, and interprets the data in the study (Creswell, 2009). Secondary analysis is
a systematic method with procedural and evaluative steps, yet there is a lack of literature to
define a specific process, therefore this paper proposes a process that begins with the
development of the research questions, then the identification of the dataset, and thorough
evaluation the dataset. This procedure is illustrated by a LIS research study in which the
researcher investigated school librarians as leaders in technology integration.
Once a dataset that appears viable in addressing initial requirements discussed above is
located, the next step in the process is evaluation of the dataset to ensure the appropriateness
for the research topic. The advantage is that the data already exist in some form and can be
evaluated for appropriateness and quality in advance of actual use propose a reflective
approach to evaluate the data in a stepwise fashion. The following evaluative steps should be
followed in order to determine the appropriate match of a dataset to a research investigation
and ensure congruency, quality of the primary study and the resulting dataset: (a) what was
the purpose of this study; (b) who was responsible for collecting the information; (c) what
information was actually collected; (d) when was the information collected; (e) how was the
information obtained; and (f) how consistent is the information obtained from one source
with information available from other sources. The researcher was given access to and
utilized all documentation on the collection of the data, information found in publication, and
consulted the investigators from the primary study in order to complete this evaluation.
Research chart:
The proposed study will be based on the following Research Design:

Exploratory Descriptive Empirical

 Review of Literature Representation of data as it is Testing the Hypotheses.

has been undertaken collected.
and will also be
referred to in future.
 Various variables to be
used in study have
been explored.

37
Universe of the study

For the purpose of the study, universe comprises of all the IT companies listed on
National Stock Exchange (NSE).

Sample Details
Sample selection has been done by using following methodology:

1. From different stock exchanges National Stock Exchange has been selected
as it is the first demutualized electronic exchange in the country as well as the
largest stock exchange in India by market capitalization $1.65 trillion as on 23
Jan 2015 and trade value $ 442 billion as on June 2014 ( NSE Site) .
2. Thereafter, top 30 IT Companies has been selected out of all the listed IT
companies present on NSE on the basis of market capitalization and also by
keeping in view its major contribution which is more than 60% of total market
capitalization of IT sector.

Sampling Process Undertaken

1. Identifying the Target population All listed IT companies on NSE

2. Specifying the sampling frame Top 30 IT Companies
3. Determination of the sample Size 30 Companies

38
 Period of Study:

The time frame for the purpose of research covers the study period of 10 years starting
from 1 April 2006 to 31 March 2016. Basis for selection of this period are as follows:

 This duration faced both boom as well as recession phases which may help to
measure the performance of micro economic along with macro economic
variables in the movement of Indian stock market.
 This time frame witnessed so many structural as well as substantial policy changes.





39
 Data Analysis and Interpretation
This study is primarily based on secondary data that were extracted from various sources

Macroeconomic Variables
S.N Variables Symbol Source Unit of Measurement
o
1. Exchange Rate ER Dbie.rbi.org.i Rs vs $
n
2. Foreign Exchange FER Dbie.rbi.org.i Rs. Billions
Reserve n
3. Industrial Growth Rate IGR Dbie.rbi.org.i %
n
4.
6. Inflation
Gold Prices Inf
GP Dbie.rbi.org.i
www.mcxindia.c Decimal
Rs/Barrel
omn
5.
7. Repo Rate
Foreign Repo
Direct Investment FDI Dbie.rbi.org.i
Dipp.nic.in Rs
US$crore
million
n
8. Crude Oil Prices COP www.mcxindia.c Rs / Barrel
om

Company Specific Variables

S.N Variables Symbol Source Unit of Measurement
o
1. Earning Per Share EPS Financial Statements of the Rs
companies under study.
2. Book Value BV Financial Statements of the Rs.
companies under study.
3. Dividend Per Share DPS Financial Statements of the Rs
companies under study.
4. Return On Equity ROE Financial Statements of the Rs
companies under study.
5. Price Earning Ratio P/E Ratio Financial Statements of the Rs
companies under study.
mentioned below:

40
41
42
Findings

From the above analysis the author concludes that the association that exist between rate
of interest and Indian stock market is negative. There is a strong negative association exist
between GDP and GDP PER CAPITA with the Indian stock market. Whereas in case of
association between inflation rate and stock market in India, it is found moderately
positive. However, the results of association between Inflation and Interest rate are
statistically insignificant whereas the association results of GDP and GDP Per Capital is
statistically significant.
When interpretation is made on significant impact of macroeconomic factors on stock
market in India, GDP and GDP PER CAPITA shows significant impact but inflation and
interest rate show insignificant impact. So, in India inflation and interest rate put no
impact on stock market.
All macroeconomic variables are statistically important in the case of an individual
relationship between each macroeconomic variable and the stock market in both countries.
As per the analysis in case of interrelationship between macroeconomic variables and
stock market of both the country, it is found that macroeconomic variables are statistically
significant thereby rejecting the hypothesis seven and eight concluding that there is no
interrelation impact exist.

43
Conclusion.

The undertaken research will be helpful in the following areas:

 Facilitates professionals, investors and various other people in their investment

decision making process.
 Many researches have been done by different researchers using either company
specific or macroeconomic variable. But present research will emphasize in
establishing an important linkage between stock returns & both company
specific and macro economic variables.
 Assists the interested group to take managerial, operational decision efficiently.



44
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